Simon Property Group has reportedly made a bid for Macerich, the company which operates both Queens Center (above) and the Shops at Atlas Park. Photo Courtesy of Yelp.
Despite the fact that large-scale shopping malls have generally struggled to find customers in recent years, two major Queens retail destinations—the Queens Center Mall in Elmhurst and The Shops at Atlas Park in Glendale; both Macerich Company-owned properties—have maintained a steady rate of progress.
The retail successes have not gone unnoticed.
The Simon Property Group, widely recognized as the top mall owner/operator in the country, with annual retail sales topping $60 billion, last week made an unsolicited, or “hostile” bid, to acquire Macerich for $91.00 per share in cash and stock—about $16 billion. As part of the deal, Simon would also assume $6.4 billion of Macerich’s debt.
In a statement, Macerich Chief Executive Officer Arthur Coppola indicated that the board had rejected Simon’s offer, characterizing it as an “unsolicited, conditional proposal [that] substantially undervalues Macerich and is not in the best interests of Macerich and its stockholders.”
Simon CEO David Simon called the declination “truly disappointing,” in part because Macerich representatives “would not even meet to discuss our proposal.”
In New York, Simon operates Roosevelt Field in Nassau County, Walt Whitman Shops on Long Island and Woodbury Common Premium Outlets in Central Valley.
Macerich also owns the Green Acres Mall in Valley Stream, Kings Plaza Shopping Center in Brooklyn and the Cross County Mall in Yonkers.
Retail analysts have regarded the Simon bid as a way to further expand the company’s national footprint and lure more shoppers to higher-end, lucrative destinations, known in the industry as “Class A” properties, such as Queens Center, one of the most densely populated and highly profitable shopping malls in the country; and Atlas Park.
In a recent letter to Coppola, David Simon sought to outline why the bid would be a win-win for both companies.
“We believe Simon’s cash and stock offer would bring compelling value to shareholders of both companies. Macerich shareholders would receive a significant current cash premium as well as the long-term upside potential of an investment in Simon, which is widely recognized for its high-quality portfolio and industry-leading operating performance,” Simon said.
He added that the group has “consistently delivered outstanding returns to its shareholders and for a decade has outperformed Macerich in virtually every key operating and financial category… We are confident our proposed transaction provides a highly attractive value proposition to Macerich shareholders.”
In addition, Simon, which already owns a 3.6-percent stake in Macerich, said that, as part of the deal, it would also sell “selected Macerich assets” to General Growth Properties, another mall operator. Insiders have speculated that Simon would sell its small stake to avoid possible anti-trust questions that could arise from the bid.
“Simon’s appetite for more Class A malls speaks volumes to the asset class,” D. J. Busch, a senior analyst with Green Street Advisors, told The New York Times. “Simon’s menu of options to allocate its capital are vast. They have opportunities in Europe and Asia. For them to put their weight behind A malls in the U.S. is an indication of where they believe the growth is.”
By Alan Krawitz and Michael V. Cusenza
